CALGARY, Aug. 27, 2014 /CNW/ - ArPetrol Ltd.
("ArPetrol" or the "Company") (TSXV: RPT) announces its financial
and operating results for the six months ended June 30, 2014 and provides an operational update
on activities to date this year as well as an outlook for the
remainder of 2014. The Company's interim condensed consolidated
financial statements and management's discussion and analysis
(MD&A) for the reporting period have been filed on SEDAR at
www.sedar.com and posted on the Company's website at
www.arpetrol.com.
Summary for the Second Quarter 2014
Operating and Financial
ArPetrol's working capital position is $1.4 million at the end of the second quarter of
2014, unchanged from the first quarter of the year. This is a
significant improvement compared to a deficit of $0.8 million at the end of 2013.
The Company had drawn $1.7 million
on its short-term loan at the end of the second quarter 2014.
Subsequent to the quarter end the Company made a $300,000 loan repayment reducing the balance of
the short-term loan to $1.4
million.
During the second quarter of 2014 the Company processed 77
million cubic feet (Mmcf) of third-party gas generating
$2.1 million of revenue. This
revenue is consistent with the first-quarter of 2014 and double the
$1.0 million earned in the
second-quarter of 2013. Increased revenues are a result of
higher processing volumes compared to the second quarter of 2013
and high prices from its new gas processing contracts negotiated in
2013.
ArPetrol's second quarter production averaged 218 barrels of oil
equivalent per day (boe/d). This is a decrease of 24 boe/d
from the first quarter of 2014. First quarter 2014 production
was affected by equipment issues early in the quarter and natural
declines. Third-quarter 2014 production to date is averaging
over 240 boe/d.
The second-quarter 2014 average realized natural gas price was
$4.37 per thousand cubic feet (Mcf),
$0.16 per Mcf higher than the price
realized in the first-quarter of 2014 and $0.82 per Mcf higher than the second-quarter of
2013. This higher price during 2014 reflects the Company's
new gas sales contract and changing exchange rates.
The average price realized for natural gas liquids (NGLs) in the
quarter was $82.18 per barrel (bbl),
an increase of $0.81 per bbl over the
first-quarter of 2014.
There were $141,914 in capital
expenditures during the quarter.
Net income for the quarter was $2,445,603
million compared to $1,643,581
for the first quarter of 2014.
On June 2, 2014 the Company
completed a consolidation of its issued and outstanding common
shares on the basis of twenty-five pre-consolidation common shares
for each one post-consolidation common share. Since the
consolidation the Company has maintained a relatively consistent
share price and market capital.
Summary of Results
(Cdn$
except shares outstanding and per
boe1 amounts)
|
Three Months
Ended
June
30,
|
Six Months
Ended
June
30,
|
|
2014
|
2013
|
2014
|
2013
|
Financial
|
|
|
|
|
Production
sales
|
632,204
|
571,770
|
1,282,355
|
1,049,314
|
Processing
sales
|
2,055,225
|
1,042,011
|
4,302,135
|
2,169,518
|
Funds flow from
operations1
|
599,774
|
(506,803)
|
1,126,494
|
1,287,194
|
Cash from (used in)
operating activities
|
(1,111,452)
|
(573,644)
|
(208,240)
|
1,747,257
|
Comprehensive (loss)
income
|
(2,665,846)
|
(1,196,228)
|
(200,906)
|
1,008,807
|
Fixed asset
expenditures
|
141,914
|
1,745,554
|
141,914
|
1,980,360
|
Weighted average
shares outstanding
|
|
|
|
|
– basic and diluted
2,3
|
22,901,468
|
22,901,468
|
22,901,468
|
22,901,468
|
|
|
|
|
|
Operations
|
|
|
|
|
Third Party
Processing –MMcf per day
|
77.3
|
65.1
|
76.3
|
68.5
|
Production
|
|
|
|
|
Natural gas – Mcf per
day
|
1,176
|
1,294
|
1,252
|
1,251
|
Natural gas liquids –
bbls per day
|
22
|
25
|
21
|
27
|
Total – boe per
day1
|
218
|
241
|
230
|
235
|
Average sales
price
|
|
|
|
|
Natural gas – $ per
Mcf
|
4.37
|
3.55
|
4.29
|
3.19
|
Natural gas liquids –
$ per bbl
|
82.18
|
67.72
|
81.78
|
67.08
|
|
|
|
|
|
Operating
netback
|
|
|
|
|
Production – $ per
boe1
|
8.73
|
4.30
|
6.08
|
0.53
|
Processing – $ per Mcf
processed1
|
0.16
|
0.05
|
0.18
|
0.05
|
|
|
|
|
|
Note 1: See
advisories at the end of this news release with respect to non-IFRS
measures and boe presentation.
|
|
Note 2: All
outstanding warrants, stock options and convertible debentures were
excluded in calculating the weighted-average number of dilutive
common share outstanding, as they were determined to be
anti-dilutive.
|
|
Note 3: On June 2,
2014 the Company completed a consolidation of its issued and
outstanding common shares on the basis of twenty-five (25)
pre-consolidation common shares for each one (1) post-consolidation
common share. All share and per share numbers have been adjusted to
reflect this consolidation.
|
|
All values in this
news release are in Canadian dollars unless otherwise
indicated.
|
Operational Update and Outlook
During the second quarter of 2014, ArPetrol continued its
progress towards a stable revenue generating company with a balance
sheet that supports its operations. The new gas
processing contracts have provided ArPetrol with a significant
increase in processing revenue and this is expected to continue
during 2014.
In April 2014 the Company
concluded a deposit transfer agreement with its final remaining
third-party contractor from its 2012 drilling program. Under
the terms of the agreement the Company agreed to transfer
USD$3 million of deposits currently
held by the contractor in the United
States to Argentina to pay
the contractor for services performed during the drilling
program. This process was completed in July
2014. There is still an an outstanding balance to be settled
with this remaining vendor.
The Company's 2014 outlook includes estimated production of 200
to 240 boe/d, estimated processing volumes of 70 to 80 MMcf/d and
estimated capital expenditures for maintenance and improvements of
$0.8 million to $1.2 million.
In 2014, the Company is forecast to be self-funding through
projected cash flows, covering its capital expenditures and,
barring any unforeseen circumstances, the repayment of its
short-term loan by the year-end.
ArPetrol continues to look at all strategic opportunities
available to the Company. These include growing its
production and processing asset base in Argentina,
considering merger opportunities to grow the Company in new basins
or considering the possible sale of assets for a value which
delivers significant returns for shareholders.
About ArPetrol Ltd.
ArPetrol is a Calgary-based
publicly traded company engaged in oil and natural gas exploration,
development and production and third-party natural gas processing
in Argentina, where it owns and
operates a gas processing facility with capacity of 85 million
cubic feet per day. The Company's common shares are listed on the
TSXV under the symbol "RPT".
Non-IFRS Measures
This news release includes references to financial measures
commonly used in the oil and natural gas industry. The terms
"operating netback" (production sales and processing sales less
royalties, turnover taxes and operating expenses) and "funds
flow from operations" (cash generated from operating activities
before changes in refundable Argentinean taxes, foreign exchange on
non-cash working capital, non-cash working capital, and translation
adjustment on operating items) do not have any standardized meaning
under International Financial Reporting Standards (IFRS), which
have been incorporated into GAAP, and may not be comparable with
similar measures presented by other companies. Funds flow from
operations should not be considered an alternative to, or more
meaningful than, cash generated from operating activities, net loss
or other measures determined in accordance with IFRS, as an
indicator of the Company's performance.
See the MD&A for the six months ended June 30, 2014, filed on SEDAR at www.sedar.com
and on the Company's website, for further discussion, including a
reconciliation of funds flow from operations to cash generated from
operating activities which is the most directly comparable measure
calculated in accordance with IFRS. There is no IFRS measure that
is reasonably comparable to operating netback and a detailed
calculation of such netbacks is presented in the MD&A for the
six months ended June 30, 2014.
Boe Presentation
Production information is commonly reported in units of barrels
of oil equivalent (boe). For purposes of computing such units,
natural gas is converted to equivalent barrels of oil using a
conversion factor of six thousand cubic feet (Mcf) to one barrel
(bbl). This conversion ratio of 6:1 represents energy equivalency,
which is primarily applicable at the burner tip, and does not
represent a value equivalency at the wellhead. Such disclosure of
boe may be misleading, particularly if used in isolation.
Forward-Looking Information
This news release contains certain forward‐looking statements
relating, but not limited, to operational information, the ability
to maintain processing rates and revenue in the same range as
realized in the second quarter, the ability to negotiate a
settlement agreement with the remaining service provider, the
ability to reduce future expenses, the ability to be self-funding
and maintain positive cash flow in 2014, estimated production
volumes, processing volumes and capital expenditures, the repayment
of the Company's short term loan and timing thereof, the
development of a go forward strategic plan and the pursuit of
strategic and growth opportunities, the possible sale of assets to
deliver value, and the ability or inability to continue as a going
concern. Forward‐looking information typically contains statements
with words such as "anticipate", "believe", "expect", "plan",
"intend", "estimate", "propose", "project", or similar words
suggesting future outcomes. The Company cautions readers and
prospective investors in the Company's securities not to place
undue reliance on forward‐looking information as, by its nature, it
is based on current expectations regarding future events that
involve a number of assumptions, inherent risks and uncertainties,
which could cause actual results to differ materially from those
anticipated by the Company.
Forward-looking information is based on management's current
expectations and assumptions regarding, among other things, the
willingness of the remaining creditor to settle outstanding
amounts, future operations and transactions, future capital and
other expenditures (including the amount, nature, timing,
availability and sources of funding thereof), stable processing
volumes, future production and processing revenue, future economic
conditions, future currency and exchange rates, future pricing, the
ability to repatriate funds from Argentina, continued political stability in
the areas in which the Company is operating, the reduction of
G&A and expenses, and the Company's continued ability to obtain
and retain qualified management and staff and equipment in a timely
and cost-efficient manner. Although the Company believes the
expectations and assumptions reflected in such forward‐looking
information are reasonable, they may prove to be incorrect.
Forward‐looking information involves significant known and
unknown risks and uncertainties. A number of factors could cause
actual results to differ materially from those anticipated by the
Company, including but not limited to uncertainty regarding the
willingness of the remaining creditor to negotiate a settlement or
whether it will commence legal proceedings , risks associated with
the oil and natural gas industry (e.g., operational risks for its
producing assets risks inherent in future drilling programs and the
operation of the gas plant, and health, safety and environmental
risks), the ability to retain management and staff, the ability to
continue as a going concern, difficulties that may be encountered
to repatriate funds, weather-induced delays and natural disasters,
interruptions to production and processing revenue, production
declines, the uncertainty regarding future revenues, union
activities and labour issues in Argentina, uncertainty regarding the ability
to pursue strategic opportunities or a sale of assets, the risk of
commodity price changes, the risk of foreign exchange rate
fluctuations (which may not be as favourable as those currently
experienced), currency controls and a change in the manner and
rates at which the Company is exchanging currency, and risks
associated with international activity and political risks over
which it has no control (including risks related to the general
economic and business conditions in Argentina, economic, social or political
instability or change, the uncertainty of negotiating with foreign
governments, expropriation and/or nationalization, changes in
export or exchange policies, adverse determinations or rulings by
governmental authorities, and changes in energy policies or in the
personnel administering them).
The forward‐looking information included herein is expressly
qualified in its entirety by this cautionary statement. The
forward‐looking information included herein is made as of the date
hereof and the Company assumes no obligation to update or revise
any forward‐looking information to reflect new events or
circumstances, except as required by law.
Additional information relating to the Company is also available
on SEDAR at www.sedar.com.
AR Petrol's head office address is 700, 815 8 Avenue S.W.,
Calgary, AB T2P 3P2
Neither the TSXV nor its Regulation Services Provider (as
defined in the policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE ArPetrol Ltd.